Rule: Walnuts Grown in California Order Amending Marketing Order and Agreement No. 984

11328 Federal Register / Vol. 73, No.
42 / Monday, March 3, 2008 / Rules and Regulations
70240). Copies of the rule were mailed Dated: February 27, 2008. §§ 984.7, 984.13, 984.14, 984.15, 984.21,
or sent via facsimile to all Board Lloyd C. Day, 984.22, 984.42, 984.46, 984.48, 984.50,
members and tart cherry handlers. Administrator, Agricultural Marketing 984.51, 984.52, 984.59, 984.67, 984.69,
Finally, the rule was made available Service. 984.70, 984.71, 984.73 and 984.89,
through the Internet by USDA and the [FR Doc. E8–4008 Filed 2–29–08; 8:45 am] which are effective September 1, 2008.
Office of the Federal Register. A 30-day BILLING CODE 3410–02–P FOR FURTHER INFORMATION CONTACT:
comment period ending on January 10, Melissa Schmaedick, Marketing Order
2008, was provided to allow interested Administration Branch, Fruit and
persons to respond to the proposal. No DEPARTMENT OF AGRICULTURE Vegetable Programs, Agricultural
comments were received. Marketing Service, USDA, Northwest
Agricultural Marketing Service Marketing Field Office, 1220 S.W. Third
After consideration of all relevant Avenue, Room 385, Portland, Oregon
matter presented, including the 7 CFR Part 984 97204; telephone: (503) 326–2724, Fax:
information and recommendation (503) 326–7440, or e-mail:
[Docket No. AO–192–A7; AMS–FV–07–0004;
submitted by the Board and other FV06–984–1] Melissa.Schmaedick@usda.gov.
available information, it is hereby found Small businesses may request
that this rule, as hereinafter set forth, Walnuts Grown in California; Order information on this proceeding by
will tend to effectuate the declared Amending Marketing Order and contacting Jay Guerber, Marketing Order
policy of the Act. Agreement No. 984 Administration Branch, Fruit and
It is further found that good cause Vegetable Programs, AMS, USDA, 1400
AGENCY: Agricultural Marketing Service, Independence Avenue, SW., Stop 0237,
exists for not postponing the effective USDA. Washington, DC 20250–0237; telephone:
date of this rule until 30 days after ACTION: Final rule. (202) 720–2491, fax: (202) 720–8938.
publication in the Federal Register (5
SUMMARY: This rule amends the SUPPLEMENTARY INFORMATION: Prior
U.S.C. 553) because handlers are already
marketing order for walnuts grown in documents in this proceeding: Notice of
shipping tart cherries from the 2007–
California. The amendments were Hearing issued on April 18, 2006, and
2008 crop and handlers need to be published in the April 24, 2006, issue of
aware of this action as soon as possible. proposed by the Walnut Marketing
Board (Board), which is responsible for the Federal Register (71 FR 20902); a
Further, handlers are aware of this rule, Recommended Decision issued on
which was recommended at a public local administration of the order. The
amendments will: Change the marketing March 19, 2007, and published in the
meeting. Also, a 30-day comment period March 27, 2007, issue of the Federal
year; include ‘‘pack’’ as a handler
was provided for in the proposed rule Register (72 FR 14368); and Secretary’s
function; restructure the Board and
and no comments were received. Decision and Referendum Order issued
revise nomination procedures; rename
the Board and add authority to change on July 9, 2007, and published in the
List of Subjects in 7 CFR Part 930
Board composition; modify Board July 13, 2007 issue of the Federal
Marketing agreements, Reporting and meeting and voting procedures; add Register (72 FR 38498).
recordkeeping requirements, Tart This action is governed by the
authority for marketing promotion and
cherries. provisions of sections 556 and 557 of
paid advertising; add authority to accept
title 5 of the United States Code and is
■ For the reasons set forth in the voluntary financial contributions and to
therefore excluded from the
carry over excess assessment funds;
preamble, 7 CFR part 930 is amended as requirements of Executive Order 12866.
broaden the scope of the quality control
follows:
provisions and add the authority to Preliminary Statement
PART 930—TART CHERRIES GROWN recommend different regulations for This final rule was formulated on the
IN THE STATES OF MICHIGAN, NEW different market destinations; add record of a public hearing held on May
authority for the Board to appoint more 17 and 18, 2006, in Modesto, California.
YORK, PENNSYLVANIA, OREGON,
than one inspection service; replace Notice of this hearing was issued April
UTAH, WASHINGTON, AND
outdated order language with current 18, 2006 and published in the Federal
WISCONSIN
industry terminology; and other related Register on April 24, 2006 (71 FR
amendments. 420902). The hearing was held to
■ 1. The authority citation for 7 CFR
The Department of Agriculture consider the proposed amendment of
part 930 continues to read as follows: (USDA) proposed three additional Marketing Order 984, hereinafter
Authority: 7 U.S.C. 601–674. amendments: To establish tenure referred to as the ‘‘order.’’
limitations for Board members, to The hearing was held pursuant to the
■ 2. Section 930.256 is added to read as require that continuance referenda be provisions of the Agricultural Marketing
follows: conducted on a periodic basis to Agreement Act of 1937, as amended (7
Note: This section will not appear in the ascertain producer support for the order, U.S.C. 601 et seq.), hereinafter referred
Annual Code of Federal Regulations. and to make any necessary conforming to as the ‘‘Act,’’ and the applicable rules
changes. of practice and procedure governing the
§ 930.256 Final free and restricted
With the exception of the amendment formulation of marketing agreements
percentages for the 2007–2008 crop year. to establish tenure limitations, all of the and marketing orders (7 CFR part 900).
amendments were favored by walnut The notice of hearing contained order
The final percentages for tart cherries growers in a mail referendum, held changes proposed by the Walnut
handled by handlers during the crop August 1 through 17, 2007. The Marketing Board (Board), which is
rmajette on PROD1PC64 with RULES
year beginning on July 1, 2007, which proposed amendments are intended to responsible for local administration of
shall be free and restricted, respectively, improve the operation and functioning the order, and by the Agricultural
are designated as follows: Free of the marketing order program. Marketing Service (AMS).
percentage, 57 percent and restricted DATES: This rule is effective April 2, Upon the basis of evidence
percentage, 43 percent. 2008, except for amendments to introduced at the hearing and the record
VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 E:\FR\FM\03MRR1.SGM 03MRR1
Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations 11329
thereof, the Administrator of AMS on add a new paragraph (d) to § 984.35, such transfers. This will amend
March 19, 2007, filed with the Hearing Walnut Marketing Board. § 984.59, Interhandler transfers.
Clerk, U.S. Department of Agriculture, a 7. Add percentage requirements to 15. (b) Clarify that the Board may
Recommended Decision and Board quorum and voting requirements, require reports from handlers or packers
Opportunity to File Written Exceptions add authority for the Board to vote by that place California walnuts into the
thereto by April 16, 2007. Fifteen ‘‘any other means of communication’’ stream of commerce. This will amend
exceptions were filed during the (including facsimile) and add authority § 984.73, Reports of walnut receipts.
exception period. for Board meetings to be held by 16. Update and simplify the language
A Secretary’s Decision and telephone or by ‘‘any other means of in § 984.22, Trade demand, to state
Referendum Order was issued on July 9, communication’’, providing that all ‘‘United States and its territories,’’
2007, directing that a referendum be votes cast at such meetings shall be rather than name ‘‘Puerto Rico’’ and
conducted during the period August 1 confirmed in writing. This will amend ‘‘The Canal Zone’’.
through 17, 2007, among walnut § 984.45, Procedure, and will result in a 17. Add language to the order that
growers to determine whether they conforming change in § 984.48 (a), would acknowledge that the Board may
favored the proposed amendments to Marketing estimates and deliberate, consult, cooperate, and
the order. To become effective, the recommendations. exchange information with the
amendments had to be approved by at 8. Add authority to carry over excess California Walnut Commission. Any
least two-thirds of those producers assessment funds. This will amend information sharing would be kept
voting or by voters representing at least § 984.69, Assessments. confidential. This will add a new
two-thirds of the volume of walnuts 9. Add authority to accept voluntary § 984.91, Relationship with the
represented by voters voting in the financial contributions. This will add a California Walnut Commission.
referendum. Voters voting in the new § 984.70, Contributions. 18. Require that continuance
referendum favored all but one of the 10. Clarify that members and alternate referenda be conducted on a periodic
proposed amendments. members may be reimbursed for basis to ascertain industry support for
The amendments favored by voters expenses incurred while performing the order and add more flexibility in the
and included in this order will: their duties and that reimbursement termination provisions. This will amend
1. Change the marketing year from includes per diem. This will amend § 984.89, Effective time and termination.
August 1 through July 31 to September § 984.42, Expenses. The USDA proposal to authorize
1 through August 31. This will amend 11. Add authority for the Board to limitations on tenure failed to obtain the
§ 984.7, Marketing year, and will result appoint more than one inspection requisite number of votes needed, in
in conforming changes being made to service as long as the functions number or in volume, to pass.
§ 984.36, Term of office, and § 984.48, performed by each service are separate Conforming changes were made to the
Marketing estimates and and do not duplicate each other. This extent necessary. The amended
recommendations. will amend § 984.51, Inspection and marketing agreement was subsequently
2. Specify that the act of packing certification of inshell and shelled mailed to all walnut handlers in the
walnuts is considered a handling walnuts. production area for their approval. The
function. This will amend § 984.13, To 12. (a) Broaden the scope of the marketing agreement was not approved
handle, as well as clarify the definition quality control provisions and by by handlers representing at least 50
of ‘‘pack’’ in § 984.15 by including the adding authority to recommend percent of the volume of walnuts
term ‘‘shell’’ as a function of ‘‘pack.’’ different regulations for different market handled by all handlers during the
3. (a) Amend all parts of the order that destinations. This will amend § 984.50, representative period of August 1, 2006,
refer to cooperative seats on the Board, Grade and size regulations. through July 31, 2007.
redistribute member seats among 12. (b) Add authority that would
allow for shelled walnuts to be Small Business Consideration
districts, and provide designated seats
for a handler handling 35 percent or inspected after having been sliced, Pursuant to the requirements set forth
more of production, if such handler chopped, ground, or in any other in the Regulatory Flexibility Act (RFA),
exists. This will amend § 984.35, manner changed from shelled walnuts, the Agricultural Marketing Service
Walnut Marketing Board, and § 984.14, if regulations for such walnuts are in (AMS) has considered the economic
Handler. effect. This will amend § 984.52, impact of this action on small entities.
3. (b) Amend the Board member Processing of shelled walnuts. Accordingly, AMS has prepared this
nomination process to reflect proposed 13. Add authority for marketing final regulatory flexibility analysis.
changes in the Board structure, as promotion and paid advertising. This The purpose of the RFA is to fit
outlined in 3(a). This will amend will amend § 984.46, Research and regulatory actions to the scale of
§ 984.37, Nominations, and § 984.40, development. business subject to such actions so that
Alternate. 14. Replace the terms ‘‘carryover’’ small businesses will not be unduly or
4. Require Board nominees to submit with ‘‘inventory,’’ and ‘‘mammoth’’ with disproportionately burdened. Marketing
a written qualification and acceptance ‘‘jumbo,’’ to reflect current day industry orders and amendments thereto are
statement prior to selection by USDA. practices. This will amend § 984.21, unique in that they are normally
This will amend § 984.39, Qualify by Handler inventory, and § 984.67, brought about through group action of
acceptance. Exemption, and will also result in essentially small entities for their own
5. Change the name of the Walnut conforming changes being made to benefit.
Marketing Board to the California § 984.48, Marketing estimates and Small agricultural growers are defined
Walnut Board. This will amend § 984.6, recommendations, and § 984.71, Reports by the Small Business Administration
Board, and § 984.35, Walnut Marketing of handler carryover. (SBA)(13 CFR 121.201) as those having
Board. 15. (a) Clarify and simplify the annual receipts of less than $750,000.
6. Add authority to reestablish interhandler transfer provision, and add Small agricultural service firms, which
districts, reapportion members among authority for the Board to recommend to include handlers regulated under the
districts, and revise groups eligible for USDA regulations, including necessary order, were defined at the time of the
representation on the Board. This will reports, for administrative oversight of hearing as those with annual receipts of
11330 Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations
less than $5,000,000. The definition of Agriculture and Resource Economics, supplier to the food-processing
small agricultural service firm has University of California Davis, 2006), industry.
subsequently changed to one with typical average costs for a walnut According to the hearing record, the
annual receipts of $6,500,000. orchard in the Sacramento Valley are growing season commences in March of
Interested persons were invited to $2,460 per acre in full production. The each year with harvest occurring
present evidence at the hearing on the costs are broken down as follows: (a) between September and November,
probable regulatory and informational Land and trees, $678 (28 percent), (b) depending upon the variety. Inshell
impact on growers and handlers of the cultural costs, $667 (27 percent), (c) California walnuts are a seasonal item
proposed amendments, and in harvest, $538 (22 percent), (d) with 95 percent of the volume shipped
particular the impact on small equipment and buildings, $302 (12%), between the months of September and
businesses. The record evidence shows and (e) cash overhead, $275 (11 December. This represents roughly 25
that the proposed amendments are percent). percent of the industry’s production.
designed to enhance industry At an average grower price in recent Inshell walnuts are marketed primarily
efficiencies and streamline years of $0.62 per pound, a grower as a winter holiday food. According to
administrative operations of the would need a yield of 2 tons per acre the hearing record, the purchase of
marketing order. The record evidence is to break even, according to the study. significant quantities of inshell walnuts
that while some minimal costs may The breakeven price at the State average occurs due to the tradition in many
occur, those costs will be outweighed by yield of 1.5 tons per acre is about $0.70 markets of displaying them with other
the benefits expected to accrue to the per pound, which is above the actual inshell nuts as part of winter holiday
California walnut industry. price received in most recent years, but dècor.
equal to the 2004 average price received Shelled walnuts are marketed on a
Walnut Industry Background and year-round basis, and represent about 75
Overview by growers.
Individual grower costs can vary percent of utilization. Large handler
According to the record, the infrastructure investments have
California walnut industry currently has considerably due to such variables as
contributed substantially to the growth
44 handlers and approximately 5,000 horticultural practices and varieties
of the year-round shelled business, as
producers. The crop is produced in a grown, and also due to orchard location
well as the inshell business.
region that spans approximately 400 and year of acquisition, and water Over the past ten years sophisticated
miles in California’s Central Valley. availability and cost. laser-sorting equipment and new
Fifteen grower witnesses and 7 Although a majority of producers are varieties such as the Chandler have
handler witnesses testified at the considered small business entities, contributed to improved quality. Higher
hearing. Using the SBA definition record evidence also indicates that customer expectations have
($750,000 in gross annual walnut sales), producer revenue has increased over accompanied the improvements in
7 of the grower witnesses identified time. The National Agricultural technology and quality, with more
themselves as large business entities Statistical Service (NASS) crop value demand for high-quality, high-
and 6 as small business entities. All 7 estimate for 2004, $451.75 million, was specification California walnuts.
handler witnesses identified themselves 38 percent higher than in 1995, and was Marketing success in Japan is cited as a
as being large business entities the sixth successive yearly increase. prime example of this trend.
according to the SBA definition. Some Average revenue per acre in 2004 According to the hearing record,
of the handler witnesses were also reached a record $2,082. shelled walnuts are utilized in a variety
growers. According to witnesses, 37 out Record evidence also indicates that of ways, with commercial baking
of an industry total of 44 handlers acreage and production are trending believed to be the single largest
would qualify as small business entities upward. Production did not exceed utilization category. Retail consumption
under the SBA definition. Also, under 300,000 tons until 2001, but has of walnuts packaged for use in the home
the order amendments contained herein, exceeded that level for 4 out of the last has increased dramatically over the past
it is estimated that five packers would 5 years. Witnesses stated that the five- several years. Shelled walnuts may be
be considered handlers, the majority of year average production for 1996–2000 sold in packages ranging from 2.75
whom would be considered small was 244,000 tons, compared to the five- ounce retail packages to large bulk
entities. year average production (2001–2005), containers of 25 pounds or more for
Based on information presented at the which was 318,600 inshell tons. industrial users, wholesalers, and
hearing, calculations describing an According to the hearing record, a distributors. The last 12 years have seen
average California walnut producer number of factors have contributed to substantial increases in snack food uses
provide the following: Dividing 219,000 increased production in recent years. of walnuts, in addition to expansion of
bearing acres in 2005 by 5,000 New acres have been planted at a rate ingredient use beyond baking and
producers indicates an average of 44 of three to five thousand acres per year, confectionery items to include usage
bearing acres per producer. Dividing the some of which are new varieties with with salads, rice, and pasta.
two-year average crop value for 2003 higher yields. Witnesses explained that A high degree of mechanization in the
and 2004 ($414,950,000) by 5,000 older varieties may yield 1,500 to 3,000 harvest has reduced the deleterious
producers yields an average walnut pounds per acre, due to both planting impact on nut quality from rain and
revenue per producer estimate of about patterns and the typical yield of the other weather conditions. Once
$83,000. According to the hearing variety. New varieties, such as the harvested, walnuts are taken to holding
record, more than 70 percent of Chandler, will yield up to 6,000 pounds stations where a fibrous husk is
California walnut producers would be per acre. Newer plantings have led to a removed, and the walnuts are then dried
classified as small producers according reduction in the cyclical peaks and to approximately eight percent
to the SBA definition. valleys associated with the alternate- moisture. They are delivered to handlers
According to a study presented at the bearing characteristic of tree nuts. This, for further processing, which includes
hearing, entitled ‘‘Cost to Produce in turn, has facilitated better inventory cleaning, sorting, and shelling.
Walnuts in California’’ (prepared by Dr. management and has made the walnut According to the hearing record,
Karen Klonsky, Department of industry a more reliable ingredient California walnuts rank eighth in
exports over all the commodities grown assessment funds; broaden the scope of are separate and do not conflict with
in the state. The top three inshell export the quality control provisions and add each other.
markets are Spain, Italy, and Germany. the authority to recommend different To ensure that walnuts are properly
Five-year average export value (2000/ regulations for different market graded and meet marketing order
01–2004/05) is approximately $52 destinations; add authority for the Board minimum standards, the Board
million, representing 63 percent of total to designate more than one inspection currently arranges for inspection of
export value for that five-year period. service; replace outdated order language walnuts prior to shipping for all walnut
The key export markets for shelled- with current industry terminology; and handlers. The marketing order currently
walnut utilization are: Japan, Germany, other related amendments. authorizes contracting with one agency,
Spain, Israel, Korea, and Canada. Five- In addition, the order will be the California based Dried Fruit and Nut
year average export value for those six amended to require that continuance Association (DFA).
countries is $91.8 million, which is referenda be conducted on a periodic DFA inspects all walnuts that leave
about 76 percent of the total value of basis to ascertain industry support for California to certify that they meet
shelled walnut exports. the order and add more flexibility in the marketing order minimum standards.
California walnuts compete with termination provisions. Operating as an out-going inspection
walnuts grown in China, Turkey, All of the amendments are intended service, samples of packed walnuts are
France, Italy, Chile, North Korea, India, to streamline and improve the examined and certified by licensed DFA
Vietnam, Argentina, Brazil, and many administration, operation, and inspectors at the end of the handling
areas within the former Soviet Union functioning of the program. Many of the and packing process.
including Kazakhstan, Ukraine, amendments will up-date the language The following data representing
Hungary, and Moldova. Within the of the order, thus better representing current inspection costs, summarizing
European Union the major competition and conforming to current practices in actual inspection cost data for 2004–05
comes from France and Eastern Europe. the industry. The amendments are not for the entire industry (44 handlers),
In the Pacific Rim, major competitors expected to result in any significant cost was presented at the hearing by Board
include China and India. increases for growers or handlers. More representatives. According to the record,
efficient administration of program the 2004–05 cost to serve the 44
Material Issues handlers was $1.857 million, which is
activities may result in cost savings for
The amendments included in this the Board. A description of the an average cost of just over $42,000 per
final rule will: Change the marketing amendments and their anticipated handler.
year; include ‘‘pack’’ as a handler economic impact on large and small Since inspection costs depend largely
function; restructure the Board and entities is outlined below. on volume handled, the four largest
revise nomination procedures; rename handlers account for $1.282 million, or
the Board and add authority to change Designation of More Than One 69% of total inspection expenditure in
Board composition; modify Board Inspection Service the 2004–05 crop year. The 37 smaller
meeting and voting procedures; add This amendment adds authority to the handlers account for $412,172 in
authority for marketing promotion and order for the Board to designate more expenditure, about 22 percent of the
paid advertising; add authority to accept than one inspection service, as long as total, averaging about $11,000 per
contributions, and to carry over excess the functions performed by each service handler.
ANNUAL WALNUT INSPECTION COSTS USING DFA, 2004–05 CROP YEAR

Number of Average per
DFA cost handlers handler
Largest Handlers ......................................................................................................................... $1,282,362 4 $320,591

Additional Large Handlers ........................................................................................................... 162,487 3 54,162
Other Handlers ............................................................................................................................ 412,172 37 11,140
All Handlers ................................................................................................................................. 1,857,021 44 42,205
Source: Walnut Marketing Board.
The Federal-State Inspection Service trained company staff. USDA oversight higher standards under PIQ or CAIP
(FSIS) has developed effective, less ranges from periodic visits throughout would also ensure that an inspected lot
costly alternative inspection programs. the day to a continuous on-site met minimum marketing order
The Partners in Quality Program, or presence. standards.
PIQ, is a documented quality assurance DFA does not offer inspection Witnesses at the hearing testified that
system. Under this program, individual services that operate similarly to the PIQ the California walnut industry should
handlers must demonstrate and and CAIP programs. allow handlers to take advantage of
document their ability to handle and Cost savings will occur by reducing USDA’s alternative inspection programs
pack product that meets all relevant the prevalence of double inspections such as the CAIP and the PIQ. Handlers
quality requirements. Effectiveness of under the current system. Currently, one who do not wish to use the alternative
the program is verified through inspection is undertaken to meet inspection services offered by USDA
periodic, unannounced audits of each minimum USDA quality requirements would continue to use the services of
handler’s system by USDA approved specified in the marketing order. A the DFA for traditional inspection
auditors. second inspection is often necessary to services, such as end-line and lot
Under the Customer Assisted meet the considerably higher standards inspections.
Inspection Program, or CAIP, USDA of specific customers. Moving to a PIQ The amendment also specifies that
inspectors oversee the in-line sampling or CAIP program would greatly reduce ‘‘each service shall be separate so as to
and inspection process performed by inspection costs, because meeting not conflict with each other’’, meaning
that each inspection service will offer not accommodate inspection procedures cost reduction will be reflected in
distinct and different services (i.e. PIQ that support larger handler economies of increased payments to growers.
vs. lot inspections) so that the integrity scale. Witnesses stated that USDA Financial impact calculations
of both programs will be maintained. programs, such as PIQ and CAIP, are provided by the Board (shown in the
Witnesses speaking in favor of this designed to fit larger scale handling table below) indicate that introducing
amendment explained the importance of operations, and therefore offer cost the option of using PIQ or CAIP
a handler’s ability to take advantage of saving advantages that the DFA service programs could result in savings of
inspection services that would most does not. This amendment, when $1.09 million, an average per handler
economically fit the size and functions implemented, will allow handlers to use savings of $156,067 for the industry’s
of his or her operation. Currently, all the alternative inspection programs seven largest handlers. Due to the high
walnut product is inspected by DFA. offered by USDA. volumes handled, most of the savings
While this inspection service has Several witnesses indicated that accrue to the four largest handlers,
worked well for the industry for many lowering costs to handlers will benefit estimated at $1.05 million, or an average
years, the DFA inspection service does growers because they expect that the per handler of $263,169.
WALNUT INSPECTION COST COMPARISON: DFA VS. USDA FOR TOP 7 HANDLERS
Cost savings
USDA
DFA PIQ/CAIP Total Per handler
Largest 4 Handlers .......................................................................................... $1,282,362 $229,688 $1,052,674 $263,169

Additional 3 large handlers .............................................................................. 162,487 122,692 39,795 13,265
Largest 7 Handlers .......................................................................................... 1,444,849 352,380 1,092,469 156,067
Source: Walnut Marketing Board.
Data from NASS indicate that the two- Inspection of Sliced, Chopped or Witnesses contended that current
year average value of the 2003 and 2004 Ground Shelled Walnuts standards focus on visually observed
crops was about $415 million. The This amendment adds authority for characteristics that are significant for
current DFA inspection cost ($1.857 shelled walnuts to be inspected after consumer acceptance, but often do not
million) represents a very small having been sliced, chopped, or ground adequately address specific quality
proportion of crop value, about 0.4 or in any manner changed from being concerns important to various export
percent. If the largest 7 handlers used shelled walnuts, if regulations for such markets, including Europe. Such
USDA for inspection at a cost of walnuts are in effect. concerns include, for example, moisture
$352,380 and the remaining 37 handlers New walnut products are regularly content or aflatoxin tolerances. When
continue to work with DFA at an requested by both domestic and foreign implemented, this amendment will
estimated cost of $412,172, then the customers. In the last 20 years, the allow the Board to review scientific data
combined cost of $764,552 would industry has become much more and develop inspection procedures for
capable of producing at a considerably recommendation and approval by USDA
represent 0.2 percent of the recent-year
higher level quality and of developing to assure customers that walnuts meet
crop value.
more specific types of products that their specified criteria.
Witnesses emphasized the cost meet the differing needs of individual Any new quality standards
effectiveness of having an additional customers. To capitalize on this growing recommended by the Board will be
inspection agency. When implemented, capability, a number of witnesses subject to thorough review prior to
this amendment will facilitate the expressed the view that an important seeking approval from USDA. Witnesses
streamlining of handler operations to tool for increasing sales is the ability to supported this amendment as it will
utilize the inspection service best suited establish standards for these walnut give the Board authority to pursue
to their operations. products. quality regulations in addition to
Since potential savings are correlated The order currently requires shelled existing grade standards, both of which
with economies of scale, record product to be certified as merchantable, are important to industry customers.
evidence indicates that PIQ and CAIP that is, meeting the minimum USDA Witnesses emphasized that this
programs would be most beneficial for requirements prior to further processing. amendment will grant authority to the
large handlers. It is unlikely that the When handlers are processing for end Board to recommend quality standards
users that require further processing, that could exceed current standards or
smaller handlers would initially opt for
this certification represents a costly to develop new standards for product
these programs. Smaller handlers that
extra step. After the initial shelled characteristics not currently covered.
expand their operations in the future Witnesses also stated that no specific
walnut certification, the handlers
may realize benefits from switching to employ their own quality control modifications are currently requested,
PIQ or CAIP. Witnesses stated that no procedures to meet the higher customer just flexibility to create them in the
change in inspection costs is expected specifications. This amendment will future.
for handlers remaining with traditional allow a single inspection at the end of While this amendment may result in
DFA inspection services. Therefore, no the process to serve both purposes. some cost increases associated with
financial disadvantages are expected to When implemented, this amendment administration and oversight of new
result from this proposed amendment. will allow the Board to recommend quality regulations, it is also expected
When implemented, this amendment modifications to allow certification of that some handlers may benefit from
will likely result in an overall decrease product after it has been modified or lower inspection costs if the inspection
in costs of inspection to the industry. chopped, leading to cost savings in the requirements for specific markets were
handling process. modified. Any costs associated with the
implementation of this amendment are newer varieties mature later than the such handler exists. A major handler
expected to be outweighed by the varieties grown at the time of the will have to handle 35 percent or more
overall benefits accrued to the industry. program’s inception. At the same time, of the crop.
cultivation has slowly moved into areas According to the hearing record, the
Marketing Promotion and Paid
that previously were not suited for recent transition of the industry’s largest
Advertising walnut production. With differences in cooperative from a cooperative entity to
This amendment adds authority for climate, soil, and water, witnesses a publicly held company was the
marketing promotion and paid explained that these new production impetus for this amendment. Witnesses
advertising to the order. areas have slightly later growing cycles. expressed the need to modify the Board
Current promotional activities for The proposed change in the marketing structure to provide for representation
California walnuts are undertaken by year will better reflect current crop that accurately reflects the current
the California Walnut Commission cycles. industry. Witnesses advocated that the
(CWC). Witnesses stated that the CWC’s Conforming changes were made to Board structure should maintain the
activities have led to considerable § 984.36, Term of office and § 984.48, current number of Board members and
success in increasing demand for the Marketing estimates and alternates, and that the allocation of
industry’s product. recommendations, so that Board member seats between grower and
Witnesses explained that with price member terms of office and marketing handler positions should remain the
inelastic demand for walnuts, recent estimates are calculated according to the same (meaning 4 handler member seats,
increases in production could have modified marketing year. This five grower member seats and one
driven down prices and total grower amendment is not expected to result in public member).
revenue. The CWC’s successful any increases in costs to growers or Witnesses also recommended
promotional activities have helped handlers. modifying the allocation of Board
mitigate that potential impact, keeping representation according to two possible
average grower prices and grower Definition of Pack
scenarios. The two scenarios include:
revenue steady or increasing for several This amendment specifies that the act
(1) Membership allocation that
years. of packing walnuts is considered a
acknowledges the existence of a handler
According to the hearing record, handling function under the order. In
handling 35 percent or more of
adding authority for paid advertising addition, the term ‘‘pack’’ is amended to
production and, (2) membership
and promotion under the order will include shelling, and is modified so that
allocation in the absence of such
benefit the industry by allowing the packing is applicable to both inshell and
handler. According to record evidence,
Board to engage in activities that are shelled walnuts.
According to the hearing record, the these amendments will not result in any
currently supported by the Commission.
order currently defines ‘‘to handle’’ as to increases in costs.
Small businesses will be the greatest
beneficiaries of an expanded generic ‘‘sell, consign, transport, or ship, or in Nominations
advertising program, because they have any other way, to put walnuts into the
current of commerce’’. The definition This amendment modifies the Board
the least financial resources to devote to member nomination process to reflect
selling their products, according to a does not include the specific act of
packing. ‘‘To pack’’, as currently changes in the Board structure. Current
witness. nomination procedures allow for all
While an increase in advertising and defined in the order means, ‘‘to bleach,
clean, grade or otherwise prepare cooperative seat nominees to be selected
promotional activities may result in
inshell walnuts for market’’. Pack is not by the cooperative and forwarded to the
increased Board expenditures, witnesses
currently applicable to shelled walnuts. Secretary for approval and appointment.
were confident that the positive results
Witnesses stated that the amended The cooperative nominee selection
of the Board’s promotional activities on
definitions of ‘‘handle’’ and ‘‘pack’’ will process is independent of the Board. All
consumer demand for California
more accurately reflect current industry non-cooperative seat nominees are
walnuts will more than outweigh any
operations. selected through a ballot nomination
increases in costs to the industry.
This amendment is not expected to process overseen by the Board staff, and
Impact of Remaining Amendments result in any increases in costs to forwarded to the Secretary for approval
Remaining amendments are largely growers. When implemented, this and appointment.
administrative in nature and will amendment may result in some packing According to the hearing record, the
impose no new significant regulatory entities previously not considered to be revised nomination procedures will
burdens on California walnut growers or handlers under the order to be redefined allow a handler who handles 35 percent
handlers. They will benefit the industry as handlers. According to witnesses, or more of the crop to nominate persons
by improving the operation of the there are roughly five packer entities to fill its designated seats and to forward
program and making it more responsive that will qualify as handlers under the them to the Secretary for approval and
to industry needs. new definition. While some increases in appointment. Nomination of persons to
administration costs on the part of fill all other seats would be conducted
Marketing Year by the Board staff.
handlers could arise as a result of
This amendment changes the reporting requirements, record evidence In the event a handler handling 35
marketing year of the order from August indicates that the benefit of more percent or more of the crop does not
1 through July 31 to September 1 accurate industry information will merit exist, all Board nominees will be
through August 31. Under the current that expense. selected through a ballot nomination
definition of the order, the California process conducted by the Board staff.
walnut marketing year begins August 1 Restructuring of the Board While some increases in
and continues through July 31. This amendment modifies all parts of administration costs could arise as a
Witnesses explained that, over time, the order that refer to cooperative seats result of an increased number of ballots
new varieties of walnuts have been on the Board, redistributes member to be mailed by the Board if a major
introduced, and the areas in which seats among districts, and provides handler does not exist, record evidence
walnuts are cultivated have shifted. The designated seats for a major handler, if indicates that the expense would be
minor and would not directly burden Witnesses stated that references to the assessment income is less than
growers or handlers. meeting quorum requirements should be expenses. Additionally, reserve funds
amended to include a percentage could be used to defray expenses
Qualify by Acceptance
equivalent of the current six-out-of-10- incurred during any period when any or
This amendment requires Board member minimum, or sixty percent. In all of the provisions of the order are
nominees to submit a written addition, witnesses supported suspended, or to meet any other such
qualification and acceptance statement modifying the order language regarding costs recommended by the Board and
prior to selection by USDA. Currently, voting requirements to state that a sixty- approved by the Secretary. This
the acceptance procedure for persons percent super-majority vote of the amendment is not expected to result in
nominated and selected to serve on the members present at a meeting should be any significant increases in costs to
Board involves a two-step process. required of all Board decisions, except growers or handlers.
When implemented, the two steps will where otherwise specifically provided.
be combined into one, thus resulting in The order currently states that a Contributions
less paperwork, a shorter acceptance majority vote is needed, with no
procedure and improved efficiency in percentage equivalent specified. This amendment adds authority to
the acceptance process. This According to the record, the order order for the Board to accept voluntary
amendment is not expected to result in currently requires that all Board contributions. Contributions can only be
any increases in costs to growers or meetings be held at a physical location. used to pay for research and
handlers. Witnesses stated that the order should development activities, and will be free
be amended to allow for some meetings from any encumbrances by the donor.
California Walnut Board to be held using ‘‘other means of According to the hearing record, the
This amendment changes the name of communication’’, such as telephone or Board will retain oversight of the
the Walnut Marketing Board to the videoconferencing. Witnesses stated application of such contributions.
California Walnut Board. Witnesses that use of new communication Witnesses supported this amendment
stated that the name ‘‘California Walnut technology would result in time-savings by stating that it would provide the
Board’’ will more accurately represent while still allowing the Board to Board and the industry with valuable
the Board’s responsibilities. This conduct its business. Witnesses stated resources to enhance research and
amendment is not expected to result in that it is the intent of the Board that development activities. It is not
any significant increases in costs to voting procedures for all types of non- expected that this amendment will
growers or handlers. traditional meetings can be
result in any additional costs to growers
Authority To Reestablish Districts and recommended and adopted as
or handlers.
Board Structure appropriate for each type of technology
used. Reimbursement of Expenses
This amendment adds authority to The above amendments are not
reestablish districts, to reapportion expected to result in any significant This amendment clarifies that
members among districts, and to revise changes in costs to growers or handlers. members and alternate members may be
groups eligible for representation on the reimbursed for expenses incurred while
Board. The intent of this amendment is Carryover of Excess Assessment Funds performing their duties and that
to provide the Board with a tool to more This amendment adds authority to the reimbursement includes per diem.
efficiently respond to the changing order to carry over excess assessment According to the hearing record, this
character of the California walnut funds from one marketing year to the amendment will not have any impact on
industry. In recommending any such next. According to the hearing record, the current expense reimbursement
changes, the following will be the order currently states that any activities of the Board. Rather, it will
considered: (1) Shifts in acreage within assessment funds held in excess of the clarify and update order language to
districts and within the production area marketing year’s expenses must be more clearly state that while Board
during recent years; (2) the importance refunded to handlers. Refunds are members and alternates serve without
of new production in its relation to returned to handlers in accordance with compensation, expenses incurred while
existing districts; (3) the equitable the amount of that handler’s pro rata performing the duties of a Board
relationship between Board share of the actual expenses of the member that have been authorized by
apportionment and districts; (4) changes Board. the Board will be reimbursed. It is not
in industry structure and/or the This amendment will allow the
expected that this amendment will
percentage of crop represented by Board, with the approval of the
result in any additional costs to growers
various industry entities resulting in the Secretary, to establish an operating
or handlers.
existence of two or more handlers monetary reserve. This will allow the
handling 35 percent or more of the crop; Board to carry over to subsequent Quality Regulations
and (5) other relevant factors. This production years any excess funds in a
amendment is not expected to result in reserve, provided that funds already in This amendment broadens the scope
any increases in costs to growers or the reserve do not exceed approximately of the quality control provisions of the
handlers. two years’ expenses. If reserve funds do order by adding authority to recommend
exceed that amount, the assessment rate different regulations for different market
Voting Procedures could be reduced so as to cause reserves destinations. Witnesses emphasized the
This amendment modifies Board to diminish to a level below the two- usefulness in terms of market
quorum and voting requirements to add year threshold. development of being able to establish
percentage requirements, adds authority According to the record, reserve funds different regulations for individual
for the Board to vote by ‘‘any other could be used to defray expenses during markets and/or regions. Witnesses
means of communication’’ (including any production year before assessment stated that allowing the Board to make
facsimile) and adds authority for Board income is sufficient to cover such such recommendations will help the
meetings to be held by telephone or by expenses, or to cover deficits incurred walnut industry adapt to changing
‘‘any other means of communication’’. during any fiscal period when international market conditions.
Updating Order Terminology new language restated the current entities. Witnesses stated that
This amendment replaces the terms application of this provision in walnut collaboration between the two programs
‘‘carryover’’ with ‘‘inventory,’’ and transactions in simpler terms. This leads to reduced administrative costs, as
‘‘mammoth’’ with ‘‘jumbo,’’ to reflect amendment is not expected to result in much of the information collected by
current day industry procedures. any increases in costs to growers or each entity can be shared. This
Conforming changes were made to the handlers. amendment is not expected to result in
§ 984.48, Marketing estimates and any increases in costs to growers or
Reporting Requirements handlers.
recommendations, and § 984.71, Reports This amendment clarifies that the
of handler carryover, sections of the Board may require reports from Continuance Referenda
order so that order terminology is handlers and packers to include In addition, the order is amended to
consistent throughout. interhandler transfers or any other require that continuance referenda be
Handler carryover defines the amount activity that involves placing California conducted on a periodic basis to
of California walnuts (both walnuts into the stream of commerce. ascertain industry support for the order
merchantable as well as the estimated According to the hearing record, and add more flexibility in the
quantity of merchantable walnuts to be current authority provided in this termination provisions.
produced from shelling stock and section only applies to the reporting of Currently, there is no requirement in
unsorted material), wherever located, handler walnut receipts from growers. the order that continuance referenda be
held by California walnut handlers at Witnesses stated that this authority conducted on a periodic basis. The
any given time. should be broadened to include USDA believes that growers should
Witnesses explained that the current interhandler transfers, or receipts from have an opportunity to periodically vote
term ‘‘carryover’’ is misleading in that any other entity as recommended by the on whether a marketing order should
the term implies the amount of Board and approved by the Secretary. continue. Continuance referenda
inventory held by handlers from one This amendment is not expected to provide an industry with a means to
marketing year to the next. Witnesses result in any increases in costs to measure grower support for the
stated that the term ‘‘inventory’’ will growers or handlers. program. Experience has shown that
more accurately convey the intent of programs need significant industry
this definition, and will also reflect Trade Demand support to operate effectively. This
current day calculations of walnut This amendment updates and amendment is not expected to result in
availability. simplifies the language in § 984.22, any increases in costs to growers or
Section 984.67, Exemptions, of the Trade demand, to state ‘‘United States handlers.
order provides for situations under and its territories,’’ rather than name In discussing the impacts of the
which California walnuts may be ‘‘Puerto Rico’’ and ‘‘The Canal Zone’’. proposed amendments on growers and
exempted from complying with order Witnesses explained that the reference handlers, record evidence indicates that
regulations. One exemption is to ‘‘Puerto Rico’’ and ‘‘The Canal Zone’’ the changes are expected to be positive
applicable to lots of merchantable in the order is outdated and should be because the administration of the
inshell walnuts that are mammoth size updated to reference ‘‘United States and program will be more efficient. There
or larger, as defined by the United States its territories’’. will be no significant cost impact on
Standards for Walnuts in the Shell. According to record evidence, this either small or large growers or
Witnesses stated that given the new amendment will not impact trade handlers.
varieties currently being produced in demand calculations under the order Interested persons were invited to
the industry, the term ‘‘mammoth’’ no since the purpose of the reference is to present evidence at the hearing on the
longer applies. According to record accurately identify the amount of probable regulatory and informational
evidence, the current production’s shelled or inshell walnuts demanded by impact of the proposed amendments to
equivalent to ‘‘mammoth’’ size is the United States, including its the order on small entities. The record
‘‘jumbo’’ size, as defined by the United territories. Thus, while the terminology evidence is that the amendments are
States Standards for Walnuts in the identifying the geographic regions designed to increase efficiency in the
Shell. Thus, witnesses stated that the included in the calculation will change, functioning of the order.
order language should be updated to the intent of the original language will USDA has not identified any relevant
reflect the industry’s current remain unchanged. This amendment is Federal rules that duplicate, overlap or
terminology and size of walnuts being not expected to result in any increases conflict with this proposed rule. These
produced. This amendment is not in costs to growers or handlers. amendments are designed to enhance
expected to result in any increases in the administration and functioning of
costs to growers or handlers. Relationship With California Walnut marketing order 984 to benefit the
Commission California walnut industry.
Interhandler Transfers
This amendment adds language to the
This amendment clarifies the term order stating that the Board may Paperwork Reduction Act
‘‘transfer’’ as used in the order and adds deliberate, consult, cooperate and Current information collection
authority for the Board to recommend exchange information with the requirements for Part 984 are approved
methods and procedures, including California Walnut Commission (CWC). by OMB under OMB No. 0581–0178,
necessary reports, for administrative Any information sharing will be kept Vegetable and Specialty Crops. Any
oversight of such transfers. confidential. changes in those requirements as a
Witnesses stated that it would be Record evidence indicates the CWC result of this proceeding would be
beneficial to simplify current order and the Federal marketing order submitted to OMB for approval.
language so that all interhandler program are currently administered out Witnesses stated that existing forms
transfers are considered a ‘‘sale of of the same office location and employ could be adequately modified to serve
inshell and shelled walnuts within the the same staff. Thus, this amendment the needs of the Board. While
area of production by one handler to will formalize the relationship that conforming changes to the forms would
another.’’ Witnesses explained that the currently exists between the two need to be made (such as changing the
name of the Board), the functionality of with the findings and determinations set (1) Handlers (excluding cooperative
the forms would remain the same. forth herein. associations of producers who are not
As with other similar marketing order (a) Findings and Determinations Upon engaged in processing, distributing, or
programs, reports and forms are the Basis of the Hearing Record. shipping walnuts covered by the order
periodically reviewed to reduce Pursuant to the provisions of the as hereby amended) who, during the
information requirements and Agricultural Marketing Agreement Act period August 1, 2006, through July 31,
duplication by industry and public of 1937, as amended (7 U.S.C. 601 et 2007, handled 50 percent or more of the
sector agencies. seq.) and the applicable rules of practice volume of such walnuts covered by said
AMS is committed to complying with and procedure effective thereunder (7 order, as hereby amended, have not
the Government Paperwork Elimination CFR part 900), a public hearing was signed an amended marketing
Act (GPEA), which requires Government held upon the proposed amendments to agreement; and, (2) The issuance of this
agencies in general to provide the public Marketing Order No. 984 (7 CFR part amendatory order, further amending the
the option of submitting information or 984), regulating the handling of walnuts aforesaid order, is favored or approved
transacting business electronically to grown in California. by at least two-thirds of the producers
the maximum extent possible. Upon the basis of the evidence who participated in a referendum on the
The AMS is committed to complying introduced at such hearing and the question of approval and who, during
with the E-Government Act, to promote record thereof, it is found that: the period of August 1, 2006, through
the use of the Internet and other (1) The marketing order, as amended, July 31, 2007 (which has been deemed
information technologies to provide and as hereby further amended, and all to be a representative period), have been
increased opportunities for citizen of the terms and conditions thereof, will engaged within the production area in
access to Government information and tend to effectuate the declared policy of the production of such walnuts, such
services, and for other purposes. the Act; producers having also produced for
(2) The marketing order, as amended, market at least two-thirds of the volume
Civil Justice Reform and as hereby further amended, of such commodity represented in the
The amendments to Marketing Order regulates the handling of walnuts grown referendum.
984 stated herein have been reviewed in the production area in the same (3) In the absence of a signed
under Executive Order 12988, Civil manner as, and is applicable only to marketing agreement, the issuance of
Justice Reform. They are not intended to persons in the respective classes of this amendatory order is the only
have retroactive effect. The amendments commercial and industrial activity practical means pursuant to the
will not preempt any State or local laws, specified in the marketing order upon declared policy of the Act of advancing
regulations, or policies, unless they which hearings have been held; the interests of producers of walnuts in
present an irreconcilable conflict with (3) The marketing order, as amended, the production area.
an amendment. and as hereby further amended, is
The Act provides that administrative limited in application to the smallest Order Relative to Handling of Walnuts
proceedings must be exhausted before regional production area which is Grown in California
parties may file suit in court. Under practicable, consistent with carrying out It is therefore ordered, That on and
section 608c(15)(A) of the Act, any the declared policy of the Act, and the after the effective dates hereof, all
handler subject to an order may file issuance of several orders applicable to handling of walnuts grown in California
with USDA a petition stating that the subdivision of the production area shall be in conformity to, and in
order, any provision of the order, or any would not effectively carry out the compliance with, the terms and
obligation imposed in connection with declared policy of the Act; conditions of the said order as hereby
the order is not in accordance with law (4) The marketing order, as amended, amended as follows:
and request a modification of the order and as hereby further amended, The provisions of the proposed order
or to be exempted therefrom. A handler prescribes, insofar as practicable, such amending the order contained in the
is afforded the opportunity for a hearing different terms applicable to different Recommended Decision issued by the
on the petition. After the hearing, USDA parts of the production area as are Administrator on March 19, 2007, and
would rule on the petition. The Act necessary to give due recognition to the published in the Federal Register on
provides that the district court of the differences in the production and March 27, 2007, (72 FR 14368), shall be
United States in any district in which marketing of walnuts grown in the and are the terms and provisions of this
the handler is an inhabitant, or has his production area; and order amending the order and set forth
or her principal place of business, has (5) All handling of walnuts grown in in full herein.
jurisdiction to review USDA’s ruling on the production area is in the current of
interstate or foreign commerce or List of Subjects in 7 CFR Part 984
the petition, provided an action is filed
not later than 20 days after the date of directly burdens, obstructs, or affects Marketing agreements, Nuts,
the entry of the ruling. such commerce. Reporting and recordkeeping
(b) Additional findings. The effective requirements, and Walnuts.
Order Amending the Order Regulating date for the amendments shall be 30
Walnuts Grown in California days after publication in the Federal PART 984—WALNUTS GROWN IN
Register, except for §§ 984.7, 984.13, CALIFORNIA
Findings and Determinations
984.14, 984.15, 984.21, 984.22, 984.42,
The findings and determinations set 984.46, 984.48, 984.50, 984.51, 984.52, ■ For the reasons set forth in the
forth hereinafter are supplementary and 984.59, 984.67, 984.69, 984.70, 984.71, preamble, title 7 of chapter XI of the
in addition to the findings and 984.73 and 984.89, which are effective Code of Federal Regulations is amended
determination previously made in September 1, 2008. as follows:
connection with the issuance of the The amendments to these sections ■ 1. The authority citation for 7 CFR
order; and all of said previous findings should be implemented to coincide with part 984 continues to read as follows:
and determinations are hereby ratified the beginning of a new crop year. Authority: 7 U.S.C. 601–674.
and affirmed, except as such findings (b) Determinations. It is hereby
and determinations may be in conflict determined that: ■ 2. Revise § 984.6 to read as follows:
§ 984.6 Board. of whom shall have an alternate (2) District 2. District 2 shall consist
Board means the California Walnut nominated and selected in the same way of all other walnut producing counties
Board established pursuant to § 934.35. and with the same qualifications as the in the State of California south of the
■ 3. Revise § 984.7 to read as follows: member. The members and their boundary line set forth in paragraph
alternates shall be selected by the (c)(1) of this section.
§ 984.7 Marketing year. Secretary from nominees submitted by (d) The Secretary, upon
Marketing year means the twelve each of the following groups or from recommendation of the Board, may
months from September 1 to the other eligible persons belonging to such reestablish districts, may reapportion
following August 31, both inclusive, or groups: members among districts, and may
any other such period deemed (1) Two handler members from revise the groups eligible for
appropriate and recommended by the District 1; representation on the Board as specified
Board for approval by the Secretary. (2) Two handler members from in paragraphs (a) and (b) of this section:
■ 4. Revise § 984.13 to read as follows: District 2; Provided, That any such
(3) Two grower members from District recommendation shall require at least
§ 984.13 To handle. 1; six concurring votes of the voting
To handle means to pack, sell, (4) Two grower members from District members of the Board. In
consign, transport, or ship (except as a 2; recommending any such changes, the
common or contract carrier of walnuts (5) One grower member nominated at- following shall be considered:
owned by another person), or in any large from the production area; and, (1) Shifts in acreage within districts
other way to put walnuts, inshell or (6) One member and alternate who and within the production area during
shelled, into the current of commerce shall be selected after the selection of recent years;
either within the area of production or the nine handler and grower members (2) The importance of new production
from such area to any point outside and after the opportunity for such in its relation to existing districts;
thereof, or for a manufacturer or retailer members to nominate the tenth member (3) The equitable relationship
within the area of production to and alternate. The tenth member and his between Board apportionment and
purchase directly from a grower: The or her alternate shall be neither a walnut districts;
term ‘‘to handle’’ shall not include sales grower nor a handler. (4) Changes in industry structure and/
and deliveries within the area of (b) In the event that one handler or the percentage of crop represented by
production by growers to handlers, or handles 35% or more of the crop the various industry entities resulting in the
between handlers. membership of the Board shall be as existence of two or more major
■ 5. Revise § 984.14 to read as follows: follows: handlers;
(1) Two handler members to represent (5) Other relevant factors.
§ 984.14 Handler. the handler that handles 35% or more ■ 10. Revise § 984.37 to read as follows:
Handler means any person who of the crop;
(2) Two members to represent growers § 984.37 Nominations.
handles inshell or shelled walnuts.
who market their walnuts through the (a) Nominations for all grower
■ 6. Revise § 984.15 to read as follows:
handler that handles 35% or more of the members shall be submitted by ballot
§ 984.15 Pack. crop; pursuant to an announcement by press
Pack means to bleach, clean, grade, (3) Two handler members to represent releases of the Board to the news media
shell or otherwise prepare walnuts for handlers that do not handle 35% or in the walnut producing areas. Such
market as inshell or shelled walnuts. more of the crop; releases shall provide pertinent voting
■ 7. Revise § 984.21 to read as follows: (4) One member to represent growers information, including the names of
from District 1 who market their candidates and the location where
§ 984.21 Handler inventory. walnuts through handlers that do not ballots may be obtained. Ballots shall be
Handler inventory as of any date handle 35% or more of the crop; accompanied by full instructions as to
means all walnuts, inshell or shelled (5) One member to represent growers their markings and mailing and shall
(except those held in satisfaction of a from District 2 who market their include the names of incumbents who
reserve obligation), wherever located, walnuts through handlers that do not are willing to continue serving on the
then held by a handler or for his or her handle 35% or more of the crop; Board and such other candidates as may
account. (6) One member to represent growers be proposed pursuant to methods
■ 8. Revise § 984.22 to read as follows: who market their walnuts through established by the Board with the
handlers that do not handle 35% or approval of the Secretary. Each grower,
§ 984.22 Trade demand. more of the crop shall be nominated at regardless of the number and location of
(a) Inshell. The quantity of large from the production area; and, his or her walnut orchard(s), shall be
merchantable inshell walnuts that the (7) One member and alternate who entitled to cast only one ballot in the
trade will acquire from all handlers shall be selected after the selection of nomination and each vote shall be given
during a marketing year for distribution the nine handler and grower members equal weight. If the grower has orchards
in the United States and its territories. and after the opportunity for such in both grower districts, he or she shall
(b) Shelled. The quantity of members to nominate the tenth member advise the Board of the district in which
merchantable shelled walnuts that the and alternate. The tenth member and his he/she desires to vote. The person
trade will acquire from all handlers or her alternate shall be neither a walnut receiving the highest number of votes
during a marketing year for distribution grower nor a handler. for each grower position shall be the
in the United States and its territories. (c) Grower Districts: nominee.
■ 9. Revise § 984.35 to read as follows: (1) District 1. District 1 encompasses (b) Nominations for handler members
the counties in the State of California shall be submitted on ballots mailed by

§ 984.35 California Walnut Board. that lie north of a line drawn on the the Board to all handlers in their
(a) A California Walnut Board is south boundaries of San Mateo, respective Districts. All handlers’ votes
hereby established consisting of 10 Alameda, San Joaquin, Calaveras, and shall be weighted by the kernelweight of
members selected by the Secretary, each Alpine Counties. walnuts certified as merchantable by
each handler during the preceding person receiving the highest number of she is engaged in the business he or she
marketing year. Each handler in the votes for grower position shall be the is to represent, or represents, either in
production area may vote for handler nominee. his or her own behalf or as an officer or
member nominees and their alternates. (4) Nominations for handler members employee if the business unit engaged
However, no handler with less than representing handlers that do not in such business. Also, each member or
35% of the crop shall have more than handle 35% or more of the crop shall be alternate member representing growers
one member and one alternate member. submitted on ballots mailed by the in District 1 or District 2 shall be a
The person receiving the highest Board to those handlers. The votes of grower, or officer or employee of the
number of votes for each handler these handlers shall be weighted by the group he or she is to represent.
member position shall be the nominee kernelweight of walnuts certified as ■ 13. Revise § 984.39 to read as follows:
for that position. merchantable by each handler during
(c) A calculation to determine the preceding marketing year. Each § 984.39 Qualify by acceptance.
whether or not a handler who handles handler in the production area may vote Any person nominated to serve as a
35 percent or more of the crop shall be for handler member nominees and their member or alternate member of the
made prior to nominations. For the first alternates of this subsection. However, Board shall, prior to selection by USDA,
nominations held upon implementation no handler shall have more than one qualify by filing a written qualification
of this language, the 35 percent person on the Board either as member and acceptance statement indicating
threshold shall be calculated using an or alternate member. The person such person’s willingness to serve in the
average of crop handled for the year in receiving the highest number of votes position for which nominated.
which nominations are made and one for a handler member position of this ■ 14. Revise § 984.40 to read as follows:
year’s handling prior. For all future subsection shall be the nominee for that
nominations, the 35 percent handling position. § 984.40 Alternate.
calculation shall be based in the average (d) Each grower is entitled to (a) An alternate for a member of the
of the two years prior to the year in participate in only one nomination Board shall act in the place and stead of
which nominations are made. In the process, regardless of the number of such member in his or her absence or
event that one handler handles 35% or handler entities to whom he or she in the event of his or her death, removal,
more of the crop the membership of the delivers walnuts. If a grower delivers resignation, or disqualification, until a
Board, nominations shall be as follows: walnuts to more than one handler successor for his or her unexpired term
(1) Nominations of growers who entity, the grower must choose which has been selected and has qualified.
market their walnuts to the handler that nomination process he or she (b) In the event any member of the
handles 35% or more of the crop shall participates in. Board and his or her alternate are both
be conducted by that handler and the (e) The nine members shall nominate unable to attend a meeting of the Board,
names of the nominees shall be one person as member and one person any alternate for any other member
forwarded to the Board for approval and as alternate for the tenth member representing the same group as the
appointment by the Secretary. position. The tenth member and absent member may serve in the place
(2) Nominations for the two handler alternate shall be nominated by not less of the absent member, or in the event
members representing the major handler than 6 votes cast by the nine members such other alternate cannot attend, or
shall be conducted by the major handler of the Board. there is no such other alternate, such
and the names of the nominees shall be (f) Nominations in the foregoing member, or in the event of his disability
forwarded to the Board for approval and manner received by the Board shall be or a vacancy, his or her alternate may
appointment by the Secretary. reported to the Secretary on or before designate, subject to the disapproval of
(3) Nominations on behalf of all other June 15 of each odd-numbered year, the Secretary, a temporary substitute to
grower members (Groups (b)(4), (5) and together with a certified summary of the attend such meeting. At such meeting
(6) of § 984.35) shall be submitted after results of the nominations. If the Board such temporary substitute may act in
ballot by such growers pursuant to an fails to report nominations to the the place of such member.
announcement by press releases of the Secretary in the manner herein specified ■ 15. Revise § 984.42 to read as follows:
Board to the news media in the walnut by June 15 of each odd-numbered year,
producing areas. Such releases shall the Secretary may select the members § 984.42 Expenses.
provide pertinent voting information, without nomination. If nominations for The members and their alternates of
including the names of candidates and the tenth member are not submitted by the Board shall serve without
the location where ballots may be September 1 of any such year, the compensation, but shall be allowed
obtained. Ballots shall be accompanied Secretary may select such member their necessary expenses incurred by
by full instructions as to their markings without nomination. them in the performance of their duties
and mailing and shall include the (g) The Board may recommend, under this part.
names of incumbents who are willing to subject to the approval of the Secretary, ■ 16. Amend § 984.45 by revising
continue serving on the Board and such a change to these nomination paragraphs (b) and (c) and adding
other candidates as may be proposed procedures should the Board determine paragraph (d) to read as follows:
pursuant to methods established by the that a revision is necessary.
Board with the approval of the § 984.45 Procedure.
■ 11. In § 984.38, the suspension of
Secretary. Each grower in Groups August 20, 2005 (70 FR 50153), is lifted * * * * *
(Groups (b)(4), (5) and (6) of § 984.35), effective April 2, 2008. (b) All decisions of the Board, except
regardless of the number and location of ■ 12. Revise § 984.38 to read as follows: where otherwise specifically provided
his or her walnut orchard(s), shall be (see § 984.35(d)), shall be by a sixty-
entitled to cast only one ballot in the § 984.38 Eligibility. percent (60%) super-majority vote of the
nomination and each vote shall be given No person shall be selected or members present. A quorum of six
equal weight. If the grower has continue to serve as a member or members, or the equivalent of sixty
orchard(s) in both grower districts he or alternate to represent one of the groups percent (60%) of the Board, shall be
she shall advise the Board of the district specified in § 984.35(a)(1) through (6) or required for the conduct of Board
in which he or she desires to vote. The § 984.38(b)(1) through (6), unless he or business.
(c) The Board may vote by mail or § 984.50 Grade, quality and size (c) The Board shall establish such
telegram, or by any other means of regulations. procedures as are necessary to insure
communication, upon due notice to all * * * * * that all such walnuts are inspected prior
members. The Board, with the approval (d) Additional grade, size or other to being placed into the current of
of the Secretary, shall prescribe the quality regulation. The Board may commerce.
minimum number of votes that must be recommend to the Secretary additional ■ 22. Revise § 984.59 to read as follows:
cast when voting is by any of these grade, size or other quality regulations,
methods, and any other procedures and may also recommend different § 984.59 Interhandler transfers.
necessary to carry out the objectives of regulations for different market For the purposes of this part, transfer
this paragraph. destinations. If the Secretary finds on means the sale of inshell and shelled
(d) The Board may provide for the basis of such recommendation or walnuts within the area of production
meetings by telephone, or other means other information that such additional by one handler to another. The Board,
of communication and any vote cast at regulations would tend to effectuate the with the approval of the Secretary, may
such a meeting shall be confirmed declared policy of the Act, he or she establish methods and procedures,
promptly in writing: Provided, That if shall establish such regulations. including necessary reports, for such
any assembled meeting is held, all votes * * * * * transfers.
shall be cast in person. ■ 20. Amend § 984.51 by revising ■ 23. Amend § 984.67 by revising
■ 17. Revise § 984.46 to read as follows: paragraph (a) to read as follows: paragraph (a) to read as follows:
§ 984.46 Research and development. § 984.51 Inspection and certification of § 984.67 Exemptions.
inshell and shelled walnuts. (a) Exemption from volume
The Board, with the approval of the
Secretary, may establish or provide for (a) Before or upon handling of any regulation. Reserve percentages shall
the establishment of production walnuts for use as free or reserve not apply to lots of merchantable inshell
research, marketing research and walnuts, each handler at his or her own walnuts which are of jumbo size or
development projects, and marketing expense shall cause such walnuts to be larger as defined in the then effective
promotion, including paid advertising, inspected to determine whether they United States Standards for Walnuts in
designed to assist, improve, or promote meet the then applicable grade and size the Shell, or to such quantities as the
the marketing, distribution, and regulations. Such inspection shall be Board may, with the approval of the
consumption or efficient production of performed by the inspection service or Secretary, prescribe.
walnuts. The expenses of such projects services designated by the Board with * * * * *
shall be paid from funds collected the approval of the Secretary; Provided,
■ 24. Amend § 984.69 by revising
pursuant to § 984.69 and § 984.70. That if more than one inspection service
paragraph (c) to read as follows:
is designated, the functions performed
■ 18. Amend § 984.48 by revising
by each service shall be separate, and § 984.69 Assessments.
paragraphs (a) introductory text, (a)(2),
shall not duplicate each other. Handlers * * * * *
(4), and (5) to read as follows:
shall obtain a certificate for each (c) Accounting. If at the end of a
§ 984.48 Marketing estimates and inspection and cause a copy of each marketing year the assessments
recommendations. certificate issued by the inspection collected are in excess of expenses
(a) Each marketing year the Board service to be furnished to the Board. incurred, such excess shall be
shall hold a meeting, prior to October Each certificate shall show the identity accounted for in accordance with one of
20, for the purpose of recommending to of the handler, quantity of walnuts, the the following:
the Secretary a marketing policy for date of inspection, and for inshell (1) If such excess is not retained in a
such year. Each year such walnuts the grade and size of such reserve, as provided in paragraph (c)(2)
recommendation shall be adopted by walnuts as set forth in the United States or (c)(3) of this section, it shall be
the affirmative vote of at least 60% of Standards for Walnuts (Juglans regia) in refunded to handlers from whom
the Board and shall include the the Shell. Certificates covering reserve collected and each handler’s share of
following, and where applicable, on a shelled walnuts for export shall also such excess funds shall be the amount
kernelweight basis: show the grade, size, and color of such of assessments he or she has paid in
walnuts as set forth in the United States excess of his or her pro rata share of the
* * * * *
Standards for Shelled Walnuts (Juglans actual expenses of the Board.
(2) The Board’s estimate of the
regia). The Board, with the approval of (2) Excess funds may be used
handler inventory on September 1 of
the Secretary, may prescribe procedures temporarily by the Board to defray
inshell and shelled walnuts;
for the administration of this provision. expenses of the subsequent marketing
* * * * *
* * * * * year: Provided, That each handler’s
(4) The Board’s estimate of the trade
■ 21. Amend § 984.52 by revising share of such excess shall be made
demand for such marketing year for
paragraph (a) and adding a new available to him or her by the Board
shelled and inshell walnuts, taking into
paragraph (c) to read as follows: within five months after the end of the
consideration trade inventory, imports,
year.
prices, competing nut supplies, and § 984.52 Processing of shelled walnuts. (3) The Board may carry over such
other factors; (a) No handler shall slice, chop, grind, excess into subsequent marketing years
(5) The Board’s recommendation for or in any manner change the form of as a reserve: Provided, That funds
desirable handler inventory of inshell shelled walnuts unless such walnuts already in reserve do not exceed
and shelled walnuts on August 31 of have been certified as merchantable or approximately two years’ budgeted
each marketing year;
unless such walnuts meet quality expenses. In the event that funds exceed
* * * * * regulations established under two marketing years’ budgeted
■ 19. Amend § 984.50 by revising the § 984.50(d) if such regulations are in expenses, future assessments will be
heading and paragraph (d) to read as effect. reduced to bring the reserves to an
follows: * * * * * amount that is less than or equal to two
marketing years’ budgeted expenses. engaged in the production for market of and standards prescribed by the
Such reserve funds may be used: walnuts in the production area. Such Department of Justice and the
(i) To defray expenses, during any termination shall be announced on or Department of the Treasury. 31 U.S.C.
marketing year, prior to the time before the end of the production year. 3711(d)(2). These standards, known as
assessment income is sufficient to cover * * * * * the Federal Claims Collection Standards
such expenses; ■ 29. Add a new § 984.91 to read as
(FCCS), became effective on December
(ii) To cover deficits incurred during follows: 22, 2000. 31 CFR chapter IX and parts
any year when assessment income is 900 through 904.
less than expenses; § 984.91 Relationship with the California The DCIA also requires agencies, prior
(iii) To defray expenses incurred Walnut Commission. to collecting debts owed to the United
during any period when any or all In conducting Board activities and States, to:
provisions of this part are suspended; other objectives under this part, the (1) Adopt without change regulations
(iv) To meet any other such costs Board may deliberate, consult, on collecting debts by offset
recommended by the Board and cooperate and exchange information promulgated by the Department of
approved by the Secretary. with the California Walnut Commission, Justice or Department of the Treasury
* * * * * whose activities compliment those of (FCCS); or (2) prescribe agency
the Board. Any sharing of information regulations for collecting such debts by
■ 25. Add a new § 984.70 to read as
gathered under this subpart shall be offset, which are consistent with the
follows:
kept confidential in accordance with FCCS. 31 U.S.C. 3716. Agency
§ 984.70 Contributions. provisions under section 10(i) of the regulations protect the minimum due
The Board may accept voluntary Act. process rights that must be afforded to
contributions but these shall only be Dated: February 27, 2008. the debtor when an agency seeks to
used to pay expenses incurred pursuant collect a debt by administrative offset,
Lloyd C. Day,
to § 984.46, Research and development. including the ability to verify,
Administrator, Agricultural Marketing
Furthermore, such contributions shall challenge, and compromise claims, and
Service.
be free from any encumbrances by the access to administrative appeals
[FR Doc. E8–4016 Filed 2–29–08; 8:45 am]
donor and the Board shall retain procedures which are both reasonable
BILLING CODE 3410–02–P
complete control of their use. and protect the interests of the United
States.
NCUA has decided to issue its own
§ 984.71 Reports of handler inventory. NATIONAL CREDIT UNION rule for debt collection and offset, given
ADMINISTRATION NCUA’s status as an independent
Each handler shall submit to the
Board in such form and on such dates regulatory agency. The final rule is
12 CFR Part 797 consistent with the FCCS, as required by
as the Board may prescribe, reports
showing his or her inventory of inshell Procedures for Debt Collection the DCIA. The salary offset portion of
and shelled walnuts. the rule has been submitted to and
AGENCY: National Credit Union approved by the Office of Personnel
Administration (NCUA). Management (OPM), as required by 5
§ 984.73 Reports of walnut receipts. ACTION: Final rule. U.S.C. 5514(b)(1). In addition to these
Each handler shall file such reports of legal authorities, NCUA is issuing these
SUMMARY: Pursuant to the Debt regulations pursuant to 12 U.S.C.
his or her walnut receipts from growers,
Collection Improvement Act of 1996 1752a(d), which authorizes NCUA to
handlers, or others in such form and at
NCUA is issuing a regulation governing adopt regulations it deems necessary for
such times as may be requested by the
procedures for collecting debts owed to transaction of its business.
Board with the approval of the
the federal government by present and
Secretary. II. The Final Rule
former NCUA employees. The
■ 28. Amend § 984.89 by redesignating regulation sets forth the procedures A. Subpart A—Scope, Purpose,
paragraph (b)(4) as (b)(5) and adding a NCUA will follow in collecting debts Definitions and Delegations of Authority
new paragraph (b)(4) to read as follows: owed to the United States arising from
activities under NCUA jurisdiction. The final rule applies only to debts
§ 984.89 Effective time and termination. owed to the United States which arise
These procedures include collection of
* * * * * out of NCUA transactions and functions
debts through administrative offset and
(b) * * * in its agency capacity, including, but
salary offset.
(4) Within six years of the effective not limited to, erroneous salary
DATES: This rule is effective April 2,
date of this amendment the Secretary overpayments to employees and claims
shall conduct a referendum to ascertain 2008. arising out of employee benefit
whether continuance of this part is FOR FURTHER INFORMATION CONTACT: withholdings and contributions. The
favored by producers. Subsequent Dianne Salva, Trial Attorney, at the rule does not apply to debts owed to or
referenda to ascertain continuance shall above address or telephone: (703) 518– payments made by NCUA in connection
be conducted every six years thereafter. 6540. with NCUA’s conservatorship,
The Secretary may terminate the SUPPLEMENTARY INFORMATION: liquidation, supervision, enforcement,
provisions of this part at the end of any or insurance responsibilities, nor does it
fiscal period in which the Secretary has I. Background limit or affect NCUA’s authority
found that continuance of this part is This final rule implements the Debt pursuant to 12 U.S.C. 1752(a) and 1766.
not favored by a two-thirds (2⁄3) majority Collection Improvement Act of 1996 The Executive Director shall follow
of voting producers, or a two-thirds (2⁄3) (DCIA). The DCIA requires federal the procedural standards for collecting
majority of volume represented thereby, agencies to collect debts owed to the debts set forth in the FCCS when he
who, during a representative period United States under regulations determines that it is appropriate to
determined by the Secretary, have been prescribed by the head of the agency, initiate debt collection or seek offset to

Rule: Walnuts Grown in California Order Amending Marketing Order and Agreement No. 984

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Rule: Walnuts Grown in California Order Amending Marketing Order and Agreement No. 984

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11328 Federal Register / Vol. 73, No.

42 / Monday, March 3, 2008 / Rules and Regulations

ANNUAL WALNUT INSPECTION COSTS USING DFA, 2004–05 CROP YEAR

Largest Handlers ......................................................................................................................... $1,282,362 4 $320,591

Largest 4 Handlers .......................................................................................... $1,282,362 $229,688 $1,052,674 $263,169

the counties in the State of California shall be submitted on ballots mailed by

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